Annual inflation in Germany declined in June

The Federal Statistical Office of Germany (Destatis) has released preliminary data for June regarding consumer price increases.

Accordingly, annual inflation in Germany, which was 2.4 percent in May, declined to 2.2 percent in June.

Thus, the annual inflation rate in Germany has fallen by more than 6 percentage points since its peak in the autumn of 2022.

Market expectations were for inflation to fall to 2.3 percent in June.

The inflation rate had reached its lowest level in nearly 3 years at 2.2 percent in March and April, before rising for the first time this year in May.

On a monthly basis, the country's inflation rate showed an increase of 0.1 percent.

The EU-harmonized CPI rose by 0.2 percent compared to the previous month in June and by 2.5 percent on an annual basis. The EU-harmonized CPI was recorded at 2.8 percent annually in May.

Core inflation in the country, calculated by excluding food and energy, fell from 3 percent to 2.9 percent in June.

Meanwhile, prices for food products, which were the biggest determinant of inflation in the country last year, increased by 1.1 percent in June compared to a year ago, while energy products showed a decline of 2.1 percent.

INFLATION MAY FALL BELOW TARGET

On the other hand, while the inflation rate in Germany, the largest economy in the Eurozone, is considered particularly important for inflation trends in the region, the Ifo Institute for Economic Research, one of Germany's leading economic think tanks, expects inflation in the country to fall below 2 percent in the summer months.

Prof. Dr. Timo Wollmershaeuser, Head of Ifo Business Cycle Research and Economic Forecasting, stated that fewer companies in industry and consumer-related sectors are planning price increases compared to the previous month, adding, "Therefore, it is likely that the inflation rate will continue its slow decline and fall below the 2 percent threshold in August for the first time since March 2021."

If the Ifo Institute's forecasts prove correct, the inflation rate in Germany will fall below the European Central Bank's (ECB) 2 percent target during the summer months.

After the inflation rate in the Eurozone reached a record level of over 10 percent in the autumn of 2022, the ECB had raised its key interest rates 10 consecutive times until September 2023. With this, the inflation rate in the region fell to 2.6 percent in May.

In June, the ECB cut interest rates for the first time since 2019, in anticipation that inflation would continue to fall.

Data for the Eurozone regarding June will be announced tomorrow.

INFLATION IN TURKEY KNOWS NO RECORDS

While inflation is on the decline in Europe and the world, it shows no signs of slowing down in Turkey, despite interest rates being raised to the 50 percent level.

Following the appointment of Treasury and Finance Minister Mehmet Şimşek, the government's promises of a decline in inflation are not reflected in the statistics.

Successive price hikes and new tax implementations show that the government is placing the burden of inflation on the backs of citizens.

The declining inflation in Europe also invalidates the claim by media close to the government that inflation is a global trend.

News Source: 12punto